The Morning Update

The US$ edges higher, oil prices slip, equity markets are mixed, while US yields rise as risk sentiment steadies. Markets steady heading into a flurry of US corporate earnings that should provide an overview of corporate health and the recession threat. US yields trade higher after Fed Governor Waller said he favored more policy tightening which scaled back expectations of rate cuts later in the year. Today sees a light economic docket so focus will be on German Central Bank President Nagel, BoE Cunliffe & ECB President Lagarde’s speeches today for intraday direction.

‍

‍In other news. Ukraine seeks re-opening of grain transit via Poland “as a first step” at talks in Warsaw on Monday. US warship sails through Taiwan Strait following China war games. European equities tested 1-year highs ahead of US company earnings. G7 ministers set new targets for solar & wind capacity. The Bank of England considers major reform of deposit guarantee scheme. Chinese property prices rise ahead of first-quarter GDP release.

‍

‍In Currency markets. US$ firms after FED Waller comments he favored more tightening. Emerging currencies firm finding support as Shanghai shares hit 9-month highs on recovery hopes. CNY is flat, while Asian currencies slip 0.15% on average vs US$. Trading currencies ease with CHF & MXN Flat, AUD, SEK & NZD ease 0.1%, JPY down 0.2%, NOK weakens 0.25% & ZAR falls 0.45% vs US$.

‍

Oil prices slip slightly as markets await China GDP data on Tuesday. C$ steadies after weakening off its 2-month highs of 1.3303 Friday as markets are sideline today ahead of Tuesday’s China GDP report. BoC Macklem said Friday that the BoC had discussed raising rates at its policy meeting before deciding to keep rates on hold. Domestically jobs data remains firm & BoC raised its growth forecast from 1% to 1.4% in 2023. Support holds at 1.3265, while resistance remains at 1.3390.

‍

EURCAD slips in early trading as risk sentiment eases and Euro slips heading into EBC Lagarde comments & China GDP on Tuesday. Support resets 1.4600 while resistance lowers to 1.4750.

‍

Euro slips below 1.1000 as risk sentiment eases after Fed Waller comments. Euro slips as markets respond to Fed Waller comments which caused investors to revise expectations that the Fed could ease rates Q4/2023.Today focus will be on ECB Lagarde speech after several policymakers commented that the central bank will hike rates in May. Expect markets to remain somewhat sidelined ahead of China’s GDP report on Tuesday. Support holds at 1.0920 while resistance lowers to 1.1020.

‍

GBPEUR holds flat heading into a week of key economic releases starting with Tuesday’s China GDP. Support holds at 1.1250 (.8888) while resistance remains at 1.1400 (.8719).

‍

GBP weakens amid a shift to cautious risk sentiment ahead of week of key UK economic releases. Markets will be focused on a flurry of key UK data including Claimant Count Rate, UK CPI, UK PPI, & S&P Global/CIPSServices PMI data. Domestically ongoing strikes continue to cause to UK economy to stagnate and which could push the economy into recession will weigh on the pounds ability to strengthen in the short-term. Intraday sees a light economic docket, so focus will be on BoE Cunliffe speech and then key China GDP data release Tuesday. Support lowers to 1.2360 while resistance resets to 1.2450.

‍